Inner-city rents are falling faster than anywhere else in the country as a result of international border closures.
Data released by CoreLogic on Thursday shows the closer a suburb is to the CBD, the more likely it is that rents have fallen.
And it also shows a strong correlation between a suburb’s proximity to the CBD and the depth of its rent-price falls.
The results – which cover Sydney, Melbourne and Brisbane – found a clear schism between properties closer to the CBD and those farther from city centres.
The average price of rent for houses across suburbs 10 kilometres or less from a CBD declined 2.3 per cent, while apartment rents declined 3.6 per cent on average.
Conversely, house rents more than 10 kilometres from the CBD rose by 0.1 per cent and apartment rents decreased by 0.4 per cent.
Port Phillip, Melbourne City, Manly, Mosman, and Brisbane Inner were among the hardest-hit areas.
And some of the largest increases were seen in Caboolture, Beaudesert, Yarra Ranges, Casey, the Blue Mountains and Wollondilly.
CoreLogic head of research Eliza Owen said rents in outer-city suburbs had held up more than rents in inner-city suburbs, as they were less exposed to declining overseas migration.
“Anecdotal reports assert a drawcard for outer-city suburbs is relatively cheap rents, and low density along with remote working lessening the hurdle of travel times from areas located further from the largest employment nodes,” Ms Owen said.
“This may have increased rental prices through higher demand … [with] rental value increases [occurring] in cheaper rental markets.”
That higher demand has come at a time when vacancy rates in outer-city rental markets are falling to record lows.
SQM Research has found that while more than one in 10 apartments sit empty in Melbourne’s CBD (with Sydney and Brisbane CBDs also posting double-digit vacancy rates), less than 1 per cent of properties are vacant in the Blue Mountains, Ipswich and Mornington Peninsula.
Charter Keck Cramer research director Angie Zigomanis told The New Daily that land markets in outer regions started dropping in 2018.
As a result, the supply of detached housing and apartments in these areas fell away, even though demand from local families held up.
Mr Zigomanis said the looming cuts to JobKeeper and JobSeeker could accelerate not only the mass exodus from inner suburbs, but also the rate at which rents in outer suburbs start to climb.
“In inner cities, landlords will continue discounting rents looking for a tenant if demand keeps drying up, but there might be a floor [price] where some won’t budge because they’re servicing a mortgage,” Mr Zigomanis said.
“And when there’s more pressure put on tenants – whether it’s by evictions or from reduced income-support measures – people might step away further and move into more affordable rental options out there.”
Tenants Union of NSW CEO Leo Patterson Ross said that despite rents crashing in inner-city areas, the reductions were not enough to shift the affordability landscape – particularly as renters’ incomes had fallen.
He said the lack of affordability underscored the need for more social housing.
“There is an element of people moving out of CBDs because the premium of living right in the middle of town has become questionable in the pandemic,” Mr Patterson Ross told The New Daily.
“However, people trying to move for affordability reasons are finding it difficult because they have greater competition than before, and those on JobSeeker are struggling to find a home if other applicants are employed.
“There’s no real competition outside of the private market, so there’s no incentive for a landlord to provide people at the lower end with homes as, particularly now, those who can’t afford rent are replaceable.”
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